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Securities fraud basics

Securities fraud can result in serious consequences for both those accused of securities fraud and those who have been otherwise impacted by securities fraud. Understanding securities fraud basics is useful for both accused individuals and those who have suffered because of securities fraud.

Securities fraud generally occurs when a false statement is made about a company or the value of its stock and others rely on that false information to make a financial decision based on the false information erroneously provided. Securities fraud can be complex to understand because it is largely based on knowledge of securities laws and regulations. There are several common types of securities fraud it is important to be on the lookout for.

Securities fraud can take place by the company itself if financial information about the company is not correctly reported out to shareholders by the company’s leadership. This type of behavior can artificially raise the price of the company’s stock and may encourage the purchase of stock in an overvalued and unhealthy company. Insider trading is another type of securities fraud which can occur if an individual takes action buying and selling stocks based on confidential information not available to the public. Third party misrepresentation is another type of securities fraud that involves a party providing false information to drive up the price of the stock to sell it for a profit.

Familiarity with the basics of securities fraud is helpful for anyone whose life has been impacted by securities fraud. Legal resources are available to help those involved in securities fraud situations either because they have been accused of securities fraud or otherwise experienced securities fraud in their lives.

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